After two years of saying everything will be back to normal soon, investors, businesses, and the world as a whole are ready to move forward. There is a shift to a more positive and optimistic look for the commercial real estate (CRE) sector. Still, there are some looming concerns with the new variants of Covid that may be around the corner. Just how much impact Omicron will have on the market is yet to be known, but it is clear that the world as a whole is adapting. This adaptation is moving all aspects of industry, commercial, and business forward, creating a positive outlook for 2022 and the years to follow. There are changes in the CRE industry that are linked to this recovery. Employers are bringing employees back to work, even if the new normal may include more office sharing and fewer employees working nine to five at an office. Office buildings are shifting and accommodating these trends. This includes creating an increased availability of shared workspace, use of resources between tenants to reduce costs, and recognizing the demand for luxury and prestigious CRE has not decreased but increased over the last two years.
The good news is that the investors and property owners are optimistic about the CRE trends for 2022. According to the 2022 Deloitte’s commercial real estate survey, the following information shows just how positive the potential is for the market.
- Over 80% of those responding to the survey reported they anticipated higher income and revenue in 2022 than in 2021.
- Retrofitting space and properties to incorporate advanced technology is a priority for a significant number of firms and investors. This is about a quarter of the large CRE firms in the market, which may leave gaps at all property levels that savvy smaller investor groups and CRE firms can capitalize on in this high-demand market.
- REaaS or Real Estate as a Service is becoming more important as an alternative to traditional CRE. This involves digitization and using smart buildings to create the option for on-demand space for companies. The space is customized and scalable, providing a very different model from the traditional landlord and tenant arrangement.
- Increasing focus on social responsibility in the CRE industry. This is not specific to 2022, with the focus over the last decade on building more energy-efficient, greener, and sustainable types of office and commercial spaces. As companies are more focused on meeting their customers’ demands for greater social responsibility by corporations, buildings with these features will become the new standard.
Older buildings that are in premium locations may find that some of the newer trends reduce the focus on the location and physical addresses and turn to functionality, technology, and properties with social interests as a priority. How these issues will impact the short and long-term CRE market is still unknown. However, the impact of Covid, the advances in technology, and the demand for flexibility and function in CRE will continue to be a driving factor in 2022 and beyond.
